| Kenneth Griffin, Citadel (Bloomberg) |
Multistrategy funds are among the best performers this year in what is shaping up to be a volatile one for hedge funds, marked by a huge disparity in performance.
In months when it was hard to make money, multistrategy funds displayed an ability to hold their own or avoid the sharp losses that put a number of long-short equity and activist funds into a deep hole from which they are having a tough time digging out.
Through November several of the most high-profile multistrat funds remained solidly up by double-digit rates. For example, in November, Kenneth Griffin’s Chicago-based Citadel posted a 0.42 percent gain in its Wellington fund. This brings Wellington’s gain for the year to 12.6 percent.
The fund recorded gains across a variety of its strategies: equities, commodities, fixed income and quantitative. Citadel posted gains last month in a variety of its other funds too. Citadel Global Equities returned 0.94 percent last month and is now up 14.6 percent for the year, while Citadel Tactical Trading gained 0.5 percent in November and is now up 14.6 percent for the year as well.
In a rare television interview last month, Griffin, whose firm is celebrating its 25th anniversary, told CNBC he has enjoyed a solid year investing in commodities and equities. Describing the firm’s approach to equity research, he said individuals at Citadel have conducted 15,000 manager meetings this year alone.
Eric Mindich’s New York–based Eton Park Capital Management also extended its strong gains last month. The firm’s flagship Eton Park Fund gained 1.9 percent. As a result, it is now up 11.3 percent for the year in what is shaping up to be a very strong fourth quarter for the fund.
Eton Park lost a small amount of money in the September quarter due in part to the sharp correction in global stock markets, particularly in Japan. But in October the fund founded by Goldman Sachs risk arbitrage alum Mindich rebounded by 4.5 percent. It is not publicly known what drove November results, but in October the fund’s gains were driven by U.S. equities and Japan.
Israel (Izzy) Englander’s Millennium International, managed by New York–based Millennium Management, gained about 1.1 percent in November and is now up more than 11 percent for the year. The firm also told investors it would temporarily halt taking in new money after absorbing roughly $5 billion in new capital already this year. News of the move was first reported in Absolute Return. The firm now has $34 billion under management. However, the closure is not expected to last very long. The firm may reopen its multistrategy funds in a few months, according to a person with knowledge of the firm.
Elsewhere, Donald Sussman’s Paloma Fund, managed by Greenwich, Connecticut–based Paloma Partners, gained 0.5 percent last month and is now up 9.5 percent for the year. Unlike many other multistrat funds, Paloma does not rely much on the equities markets, which typically account for a very small portion of its portfolio. Rather, the fund has a heavy concentration on algorithmic quantitative strategies.
